Led by its founder Preston Manning, Reform rapidly gained momentum in western Canada, and successfully supplanted the PCs as the largest party in Western Canada after the 1993 election. In opposition, the party advocated for spending restraint and democratic reform. In the leadup to the 1997 election, the party attempted to make a national breakthrough and replace the ailing PCs. However, a Liberal victory and disappointment with the lack of Eastern seats led many members to question the future direction of a party.

With the collapse of the 1984-1993 PC electoral coalition composed of westerners, rural Ontarians and Quebec nationalists, the Reform Party's fortunes rose. It first entered Parliament in 1989 when Deborah Grey won a by-election in an Edmonton-area riding. The party achieved major breakthrough in the 1993 federal election, when it went from holding 1 seat to 52, just two seats behind the Bloc Quebecois who held Official Opposition status.

Its platform and policies emphasized the rights and responsibilities of the individual, Senate and other democratic reforms, and smaller more fiscally responsible government. However, the party came under persistent partisan attack of being extremist and intolerant due to a number of statements by Reform MPs which were considered to be racist, homophobic, and sexist. In the 1997 election, the Reform Party made only minor gains, but did manage to become Canada's official opposition. The party still failed to present a true challenge to the Liberal government, since its agenda was seen as too extreme for the liking of central and eastern Canada. Reform actually won a seat in Ontario in 1993, but lost it in 1997.

Demand for unity by the right encouraged Manning to promote a new movement, the "United Alternative", to create a small-"c" conservative alternative to the Liberals. Manning blamed "conservative" vote splitting for keeping the Liberals in power, although some polls showed that the Liberals were the second choice of many PC voters (especially in Ontario). Manning's efforts created a strong debate in the Reform party, and he would even write a letter to the effect that he didn't want to lead Reform anymore, but would only lead the new party. Manning won a leadership review with over 75% support quelling his opposition. In 2000, following the second of the two United Alternative conventions, the party voted to dissolve in favour of a new party: the "Canadian Conservative Reform Alliance", a declaration of policy and a new constitution. The new party's platform was a mixture of the PC and Reform platforms. However, it was largely seen as merely a renamed and enlarged Reform Party. Former Reform members dominated the new party, and the Reform caucus in the Commons essentially became the Alliance caucus (with a few exceptions). Former Prime Minister Brian Mulroney called the party "Reform in pantyhose", and some opponents referred to the party as the "Reform Alliance" to enforce this perception.

Media covering the convention quickly pointed out that if one added the word "Party" to the end of the party's name, the resulting initials were "CCRAP" (humorously pronounced "see-crap" or just "crap") even though it, like the Bloc Québécois, didn't actually have the word party in its name. When it became clear after a few days that the joke was not going to subside, the party's official name was quickly changed to the Canadian Reform Conservative Alliance, but was almost always called simply "the Canadian Alliance" or "the Alliance". However, the "CCRAP" nickname was still used by its opponents. Grey, the deputy leader of Reform, was chosen as the new party's interim leader, becoming the first female Leader of the Opposition in Canadian history.

The federal Progressive Conservatives under Joe Clark refused to participate in these talks, but there was strong support from many provincial Tories, especially in Ontario and Alberta. Subsequently, at the new party's first leadership convention, Manning was defeated in favour of the younger, more charismatic Stockwell Day, longtime treasurer (finance minister) of Alberta. One Progressive Conservative senator, Gerry St. Germain, joined the new party in October 2000, becoming the Alliance's only member of the Senate.

In the fall of 2000, the Liberals called a snap election that caught the Alliance off-guard. Nonetheless, the party went into the election with great hopes, campaigning on tax cuts, an end to the federal gun registration program, and their vision of "family values". Day was expected to have greater appeal to Ontario voters. At one point, the Alliance was at 30.5% in the polls, and some thought they could win the election, or at least knock the Liberals down to a minority government. However, the Liberals responded by accusing the Alliance of having a "hidden agenda" (introduce two-tier health care, threatening gay rights and abortion rights) which the party denied.

Though disappointed with the election results in Ontario, it increased its presence to 66 MPs, including two MPs from Ontario. Nationally, the party increased its popular vote to 25%. The Alliance remained the Official Opposition in the House of Commons. The Liberals increased their large majority mostly at the expense of the NDP, and the Tories under Joe Clark lost many seats and remained in fifth place, but Clark was elected in Calgary Centre in the middle of Alliance country, so the overall political landscape was not significantly changed.

However, the Alliance failure to win more than the two seats in Ontario, along with residual resentments from the Alliance leadership contest and questions about Day's competence, led to caucus infighting. In the spring of 2001, eleven MPs who either voluntarily resigned or were expelled from the party formed the "Independent Alliance Caucus". The group was led by Chuck Strahl and included Grey. Day offered the dissidents an amnesty at the end of the summer, but seven of them, including Grey and Strahl, turned it down and formed their own parliamentary grouping, the Democratic Representative Caucus. The DRC formed a coalition with Clark's Tories in the House, which was widely seen as an attempt by Clark to reunite the Canadian right on his terms. The split forced Day to call a new leadership convention, and, in April 2002, Stephen Harper defeated Day at the subsequent Canadian Alliance leadership election.

Once Harper assumed the leadership, most of the rebellious MPs rejoined the Alliance party. Two MPs did not rejoin, however: Inky Mark chose to remain outside of caucus, and eventually joined the Tories, and the scandal-plagued Jim Pankiw was rejected when he applied for readmission to the Alliance caucus.

The Reform Party's agenda was profoundly influenced by its rejection of the dominant notion at the time that Canada was always divided between English and French Canada.[10] The Reform party claimed that this thesis of two founding peoples was flawed and Preston Manning called for a New Canada with a new identity that would solve existing problems, and stated this in his book The New Canada (1992) and laid out a solution:

The leaders of Canada's traditional federal parties continue to think of our country as "an equal partnership between two founding races, the English and French"—a federation of founding peoples and ethnic groups distinguished by official bilingualism, government-sponsored multiculturalism, and government enterprise. The approach to national unity is to grant special status to those Canadians who feel constitutionally or otherwise disadvantaged. This is Old Canada—and it has become "a house divided against itself."[11]

Reformers seek a New Canada—a Canada which may be defined as "a balanced, democratic federation of provinces, distinguished by the sustainability of its environment, the viability of its economy, the acceptance of its social responsibilities, and the recognition of the equality and uniqueness of all of its citizens and provinces." New Canada must include a new deal for aboriginal peoples and a new Senate to address the problem of regional alienation. New Canada must be workable without Quebec, but it must be open and attractive enough to include a New Quebec.[11]

The Reform Party saw the Canadian federal government as led by the Liberal and Progressive Conservative parties as being consistently indifferent to Western Canada while focusing too much attention on Eastern Canada (especially Quebec). It noted that the National Energy Program of the 1980s, introduced by a federal Liberal government, involved major government intervention into Canada's energy markets to regulate prices, resulting in economic losses to Alberta and benefits to Eastern Canada. It also cited the 1986 decision by a federal Progressive Conservative government to contract the construction of CF-18 military aircraft to an unprepared contractor in Quebec rather than a ready contractor in Winnipeg, Manitoba. To Reformers, these events served as evidence that Liberals and Progressive Conservatives consistently favoured Eastern Canada at the expense of Western Canada.[12]

The Reform Party called for a decentralized Canadian federation whereby the provinces would have more authority and advocated that the Canadian federal government ensure provincial equality in Canada[13] such as by creating a Triple E Senate the Canadian Senate (upper house) would become a democratically-elected chamber (then and now the Senate continues to be an appointed body, appointments are still made by the Governor General, but now following the list offered by the Prime Minister) and each province would have an equal number of seats, so that no province would have more power than another. A Triple-E Senate was highly popular in western Canada, especially Alberta where the Reform Party drew large support.[14]

The Reform Party called for the privatization of various government services that the party believed could be better provided by the private sector. These government services included a number of state-owned corporations including Canada Post, the Canadian Broadcasting Corporation, and Petro Canada. The Reform Party suggested that Canada's government-funded universal health insurance system be replaced by a two-tier private and public health insurance system. Preston Manning asserted however that the Reform Party was committed to ensuring that all Canadians would be able to access health insurance and health services.[15]

The Reform Party called for major changes in the federal government's relations with aboriginal peoples, which included dismantling the Department of Indian Affairs and transferring its responsibilities directly to aboriginal governing bodies to lessen aboriginal peoples' dependence on the federal government.[17]

The Reform Party strongly opposed extending marriage rights to gays and lesbians. Many members of the Reform Party saw homosexuality as a moral wrong. Reform leader Preston Manning himself once publicly stated that "homosexuality is destructive to the individual, and in the long run, society".[18]

The Reform Party advocated an immigration policy based solely on the economic needs of Canada.[19] Reform's early policy proposals for immigration were seen as highly controversial in Canada including a policy pamphlet called Blue Sheet that was issued in mid-1991 stating that Reformers opposed "any immigration based on race or creed or designed to radically or suddenly alter the ethnic makeup of Canada".[20] The statement was considered too controversial and subsequent Reform Party policy documents did not declare any similar concern for a radical alteration of the ethnic make-up of Canada.[21] However this controversy and others raised the question over whether Reform was intolerant to non-white people and whether the party harboured racist members.[21] Subsequent repeated accounts of xenophobic and racist statements by individual Reform party supporters and members spread this concern, though the party itself continuously denied that it supported such views.[16]

The Reform Party declared its opposition to existing government-funded and sponsored bilingualism and multiculturalism.[21] Reformers claimed that efforts to create a bilingual country had not worked and that language policy should be a provincial issue. Reformers criticized government-sponsored multiculturalism for creating a "hyphenated Canadian" identity, rather than a single Canadian identity.[22]

The Reform Party had major differences with other major federal political parties in regards to national unity, as the party did not treat the Francophone province of Quebec in a unique manner but instead saw Quebec as one of all the provinces of Canada and that all provinces should be treated equally and that no province should have a special status.[11] The Reform Party unlike other major federal parties did not believe that Quebec secession should be sought to be avoided at all costs and by all means because the party believed that this amounted to favouritism to Quebec.[11] Reformers believed that Canada could continue to exist without Quebec, but hoped that offers of decentralization of federal powers to all the provinces would satisfy the desire by the government of Quebec for greater autonomy while being equitable to all the provinces.[11]

Preston Manning denied that he and most Reformers based their policies on intolerant views, but admitted that the Reform Party's populism had in inadvertent effect of drawing in some intolerant people whom Manning claimed he had always sought to keep out of the Reform Party.[23] Manning claimed that he was just as committed to purging extremists from the Reform Party as his father Ernest Manning had done as Alberta Social Credit Party leader, in purging anti-Semites from Social Credit.[23] Manning stated that during the 1988 election he was faced with such an extremist who had joined the Reform Party named Doug Collins who was seeking nomination as a Reform candidate, Manning was faced by calls by many Reform Party supporters themselves who condemned Collins as being racist and said that they would leave the party if he were nominated.[24] Manning responded by sending a letter to the constituency association which called for all candidates to accept the Reform Party's denouncement of racism and demanded that Collins accept this, Collins and his supporters refused and he subsequently failed to win the nomination.[25]

In 1993, Manning was again confronted by an example of intolerance by a Reform Party candidate, Toronto-area candidate John Beck, who made a series of anti-immigrant remarks in an interview with Excalibur, the York University student paper. York students confronted Manning with the remarks. Within an hour, Beck was forced to withdraw his candidacy.[26] Reform Members of Parliament (MP) such as Deborah Grey joined Manning in denouncing such intolerant people who joined the party.[16] Reform MPs Jan Brown and Stephen Harper (who would later become Prime Minister) in the 1994 Reform Party convention went against the majority of the delegates of the Reform Party by refusing to support a motion that called for the Reform Party to oppose the allowance of homosexual couples to be treated the same as heterosexual couples. In 1996, after Reform MP Bob Ringma stated in a newspaper interview that store owners should be free to move gays and "ethnics" "to the back of the shop", or even to fire them, if the presence of that individual offended a bigoted customer[27] and following Reform MP David Chatters' remark that it would be acceptable for a school to prevent a homosexual person from teaching in school, a crisis erupted in the Reform Party caucus after Manning did not censure their comments. Reform MPs Jan Brown and Jim Silye demanded that Manning reprimand Ringma and Chatters and both Brown and Silye threatened that they and other moderate Reformers would leave the party if no reprimand was taken. Manning proceeded to suspend Ringma and Chatters for several months but also reprimanded Brown and Silye for speaking out against the party. Brown and Silye both subsequently left the Reform Party and later ran as Progressive Conservative candidates.

In spite of official objections to intolerance by the party leadership and some Reformer MPs, comments and decisions made at party conventions by Reform Party supporters on a number of issues were considered highly intolerant by onlookers. In 1991, Manning was humiliated at a Reform Party rally when a Reform Party supporter spoke in support of Manning in racist terms, saying “You’re a fine white person. You know, we are letting in too many people from the Third World, the low blacks, the low Hispanics. They’re going to take over the province”.[16] Later in the same rally another Reform Party supporter stood up and said “Let them [Quebeckers] go. We don’t need Quebec.”[16] Long-time Progressive Conservative member and political commentator Dalton Camp observed the 1994 Reform Party convention in Ottawa and was personally disgusted with what he heard, saying: "The speechifying gives off acrid whiffs of xenophobia, homophobia, and paranoia—like an exhaust—in which it seems clear both orator and audience have been seized by some private terror: immigrants, lesbians, people out of work or from out of town and criminals."[28] In the Reform Party policy convention in 1995, Manning urged members to avoid extremism, and a motion was passed by the vote of the delegates that the Reform Party recognized the equality of every individual, but only after the delegates demanded that the words "without discrimination" be removed from the motion.[28] The 1995 convention went on to Reform party delegates controversially called for the removal of group specification in all human rights legisiation which was accepted in the convention by a 93 percent vote in favour.[18] Another controversial motion in the 1995 convention called for tighter regulation of people infected with HIV which was supported by 84 percent of the delegates.[18] One Reformer delegate raised concern that such a policy on HIV would make the party look anti-homosexual, but another delegate responded to this saying "I did not join the Reform Party to bow down at the altar of political correctness".[18]

The Reform Party was plagued by an influx of intolerant people who supported the party's opposition to government-funded multicultural programs and bilingual programs.[16] Some have claimed that the large problem of intolerance in the Reform Party was not a mere coincidence of its policies of opposing government-sponsored multicultural programs but a deliberate intention by the Reform Party to rally such intolerant people and to push an intolerant agenda.[16] The Reform Party's troubles involving intolerant people within the party were focused on by the media which made the party appear to support such intolerance.[16]

On the issue of episodes of racism and extremism within the Reform Party, Manning himself recognized the serious dangers that the political ideology of populism (which the Reform Party supported) poses should racists and extremists infiltrate it and spoke of the serious need for the party to repel such racism and extremism, saying that:

If a revival of grassroots democratic populism is to be characteristic of the revitalization of Canadian federal politics of the 1990s, especially in Quebec and the West, it is of primary importance that its leaders be well versed in ways and means of preventing populism from developing racist or other extremist overtones. (This, of course, is also the number-one challenge facing those attempting to lead the reform movements of eastern Europe and the Soviet Union.)"[29]

By 1997, the Reform Party attempted to shed the negative public outlook on the party's views on immigration and minority rights by selecting multiple ethnic minority candidates to run as Reform Party candidates in the 1997 federal election to demonstrate that the Reform Party's policies were not intended to be intolerant. As a result, multiple minorities became Reform Party members of parliament including Rahim Jaffer, who became Canada's first Muslim member of parliament; Gurmant Grewal an Indo-Canadian who immigrated to Canada six years earlier in 1991; and Inky Mark, a Chinese-Canadian. However, these attempts to restore the Reform Party's image as a tolerant political party were damaged in the 1997 federal election when the Reform Party released a controversial television advertisement where the faces of four Quebec politicians: Prime Minister Jean Chrétien, Bloc Québécois leader Gilles Duceppe, Progressive Conservative leader Jean Charest, and the separatist Premier of Quebec Lucien Bouchard were crossed out followed by a message saying that Quebec politicians had dominated the federal government for too long and that the Reform Party would end this favouritism towards Quebec.[30] The advertisement was harshly criticized by the other party leaders including accusations that Preston Manning was "intolerant" and a "bigot" for having permitted the advertisement to be aired.[30] Manning however has not held a public negative view of Quebec and in his 1992 book, The New Canada, he complemented Quebec for being open to populist third parties, mentioning the Bloc Populaire Canadien, the Ralliement créditiste du Québec, the Parti Québécois, and the Bloc Québécois as examples of populist third parties in Quebec.[31]

The party was the brainchild of a group of discontented Western interest groups who were upset with the PC government and the lack of a voice for Western concerns at the national level. Leading figures in this movement included Ted Byfield, Stan Roberts, Francis Winspear, and Preston Manning. A major intellectual impetus at the time was provided by Peter Brimelow's 1986 book, The Patriot Game. They believed the West needed its own party if it was to be heard. Their main complaints against the Mulroney government were its alleged favouritism towards Quebec, lack of fiscal responsibility, and a failure to support a program of institutional reform (for example, of the Senate). The roots of this discontent lay mainly in their belief that a package of proposed constitutional amendments, called the Meech Lake Accord, failed to meet the needs of Westerners and Canadian unity overall.

The Reform Party was founded as a western-based populist party to promote reform of democratic institutions. However, shortly after the 1987 founding convention, social and fiscal conservatives became dominant within the party, moving it to the right. Their political aims were a reduction in government spending on social programs, and reductions in taxation. Though largely a fringe party in 1987, by 1990 the party had made huge inroads in public support as support for Mulroney's PC party dropped due to the unpopular Goods and Services Tax (GST), high unemployment, and the failure of the Meech Lake Accord. In 1992, leader Preston Manning released a book called The New Canada explaining the origins of the new party and its policies, explaining his personal life and convictions, and defending some of the controversial elements of Reform's policies.

Logo of the Reform Party of Canada from the late 1980s to early 1990s.

The Reform Party was founded as a Western-based political party in a convention in October 1987 in Winnipeg, Manitoba led by three principal organizers including Preston Manning, former Liberal Party member Stan Roberts, and Robert Muir.[32] On November 1, 1987, at the convention, Manning was unanimously named leader after Roberts left the convention in protest over the new party's finances.[33][34] The party's delegates discussed a variety of topics to formulate policies such as calling for the party to endorse a Triple-E Senate amendment to added to the Meech Lake Accord, advocating the addition of property rights into the Charter of Rights and Freedoms, and other issues such as "provincial resource rights, deficit reduction, free trade, economic diversification, welfare reform, and regional fairness in federal procurements."[34] The convention briefly discussed the contentious topic of western separation, which was not a serious concern as most of the delegates rejected the idea and Manning stated that he would refuse to lead a western separatist party and went on to say "We want to tell the rest of the country not that the West is leaving, but that the West is arriving."[34]

The party fought in the 1988 federal election, but was never considered more than a fringe element, and none of its 72 candidates won election. However, the party ran second to the governing Tories in many Western ridings and earned 2.1% of the total national vote. The party clearly identified itself as a Western-based political party in 1988 with its slogan "The West Wants In". The party advocated controversial policies such as its opposition to official bilingualism and multiculturalism and its opposition for distinct society status for Quebec which all mainstream political parties at the time supported.

In 1989, following the sudden death of John Dahmer, PC MP for Beaver River in Alberta, the Reform Party gained its first MP when Deborah Grey won the resulting by-election. Grey had finished fourth in the 1988 election. As the party's first MP, she became Reform's deputy leader, a position she held for the remainder of the party's history.

Also in 1989, Stanley Waters won Alberta's first senatorial election under the banner of the Reform Party of Alberta. In 1990, he became Reform's first (and only) federal Senator, remaining in office until his untimely death one year later. Waters' appointment, following his election victory, has led some to describe him as Canada's first elected Senator.

In 1991 and 1992, support for Reform rose not only in Western Canada, but also in other parts of Canada as well, including Ontario. The party took note of this new support and changed its position from being a Western-based political party to being a national party. However, it excluded candidates from Quebec, as there was little support from francophone Québécois for Reform's opposition to distinct society for Quebec. However, Manning did not dispel the possibility of Reform naturally expanding into Quebec in the early 1990s, as in his 1992 book, The New Canada, Manning credits the populist reform tradition in Canada as not having begun in the west, and mentions its early roots in the 19th century reform parties of Upper Canada (Ontario) Lower Canada (Quebec), and Nova Scotia that fought against colonial elites such as the Family Compact and Château Clique and sought to replace them with responsible governments.[31] In addition, Manning complimented Quebec for being open to populist politics and populist third party politics.[31]

The constitutional debacle, unpopular initiatives such as the introduction of a Goods and Services Tax (GST), together with a series of high-profile scandals, all contributed to the implosion of the Progressive Conservative "grand coalition" in the 1993 election. The Progressive Conservatives suffered the worst defeat ever for a governing party at the federal level, falling from 151 to only two seats, while the Liberals under Jean Chrétien won a majority government.

The Reform Party's success in 1993 was related to the mobilization of people who were opposed to the welfare state, but this represents only one dimension of the party's appeal. Jenkins (2002) examines the effect of issues on Reform support during the campaign and considers the actual process by which issues affected party support. Although candidates can prime or stress certain issues for voters, the priming label is sometimes misused. Jenkins makes a distinction between campaign learning and priming. If voters do not know where a party stands on an issue, they cannot adequately employ this information in their overall evaluation. Evidence demonstrates that the increased importance of attitudes toward the welfare state was largely a function of the distribution of new information or learning, while the increased importance of cultural questions represented priming.

Reform was the major beneficiary of the Tory collapse, taking nearly 16% of the popular vote – a healthy increase from 1988. With few exceptions, the PCs' Western support transferred en masse to Reform. It won all but four seats in Alberta and dominated British Columbia as well. The party also won four seats in Saskatchewan and one seat in Manitoba. Besides taking over nearly all of the PC seats in the West, Reform also won several ridings held by the social democraticNew Democratic Party (NDP). Despite sharp ideological differences, Reform's populism struck a responsive chord with many NDP voters who were dissatisfied with Audrey McLaughlin's leadership and Ontario supporters who were frustrated with the government of NDP Premier Bob Rae.

However, Reform did not do as well as hoped east of Manitoba. It was entirely shut out of Atlantic Canada – a region where a much more moderate strain of conservatism has traditionally prevailed. Many Red Tory voters in both Atlantic Canada and Ontario were fed up with the Tories, but found Reform's agenda too extreme and shifted to the Liberals, at least at the national level. Despite strong support in rural central Ontario, a very socially conservative area which had been the backbone of previous provincial Tory governments, vote splitting with the national Tories allowed the Liberals to win all but one seat in Ontario. Reform's Ed Harper managed to win in Simcoe Centre, but had 123 more votes gone to his Liberal opponent, the Liberals would have had the first-ever clean sweep of Canada's most populous province. As it turned out, this was Reform's only victory east of Manitoba, ever. The party also did not run any candidates in Quebec.

Reform began as a Western protest party in the minds of most Canadians. Its heavy concentration of support in the West netted it 52 seats. However, the Bloc Québécois's concentration of support in Quebec was slightly larger, leaving Reform three seats short of Official Opposition status despite finishing second in the popular vote. Even with these disappointments, the 1993 election was a tremendous success for Reform. In one stroke, it had replaced the Progressive Conservative Party as the major right-wing party in Canada.

Reform's ambitions of becoming a national party and spreading into the east, particularly into Ontario, were helped by the rise of Ontario Progressive Conservative Premier Mike Harris to power in 1995. Harris' Common Sense Revolution agenda shared much of Reform's fiscally neoliberal ideology, including deep spending cuts, privatization of social services, and tax cuts. The party continued to show its ties to Harris as a means to diminish support for the federal PC Party.

Reform claimed credit for pressuring the Liberal government to initiate spending cuts and focus on deficit reduction in 1995, though the party had wanted even deeper cuts. It also managed to put forward its own strategy for national unity after the slim federalist victory in the 1995 Quebec referendum on sovereignty, which advocated deep decentralization of powers from the federal government to the provinces and territories. Manning was attacked, however, for not appearing at federalist rallies in Quebec, as Prime Minister Chrétien and new Progressive Conservative leader Jean Charest had done.

Despite some steps forward, Reform came under considerable attack during its tenure in Parliament from 1994 to 1997. The party's staunch social conservative stances on bilingualism, immigration, gay rights, women's rights, minority rights, and aboriginal rights led to a large number of Reform MPs making statements that were considered to be intolerant.[who?]

From 1996 to the 1997 election, the party's executive tried to refurbish the party's image and shed its controversial past. A number of ethnic minorities were sought out as Reform candidates for the upcoming 1997 election. Also, Reform changed tactics by running a candidate in every riding in Canada, including those in Quebec. The party increased its total seats to 60 and became the Official Opposition. Despite this breakthrough, however, Reform failed to win any seats east of Manitoba. The 1997 election also saw the return of the Progressive Conservative Party to official party status following their electoral dominance of the conservative vote in eastern Canada. The party was considerably hampered in its efforts to reach Francophone voters because of Manning's inability to speak fluent French. There was also a perception of the party as being anti-Quebec due to its position on official bilingualism and its opposition to the Meech Lake Accord.

During this time, Reform again came under fire for ostensibly being extremist. The party ran an election ad in which the faces of four key Quebec leaders (Prime Minister Chrétien, PC leader Charest, former Bloc Québécois chief Lucien Bouchard, and new Bloc leader Gilles Duceppe) were crossed out, saying that Canada had been governed too long by Quebec politicians. The response to this ad was negative, and the leaders of the other parties claimed that the ad was an attack on Quebec and that Manning was a bigot.[30]

Disillusionment with the traditional political parties in general had been the impetus behind Reform's initial growth, but that growth was now felt to have stalled. Its claims to be a populist and Western protest party came under attack in 1997, when Manning accepted an offer to live at Stornoway, the official residence provided to the leader of the Official Opposition. Manning had previously said that Stornoway was a waste of taxpayer money and that he would not reside there[citation needed].

Reform had also failed in 1997 to establish itself as the clear right-wing alternative to the Liberal Party. The Progressive Conservative Party, which had been steadily rebuilt under Charest, enjoyed a modest revival in the 1997 election. It won 20 seats, up from the dismal two it had won during in the 1993 election. The split in the right-wing vote between Reform and the PCs possibly aided the Liberals to win a second majority government. Some political pundits claimed that it was a divided right which allowed the Liberals to gain a second majority government, and claimed that if the two parties did not put away their differences, the result could repeat itself.

Manning recognized the frustration by Canada's right-wing proponents and began discussions towards the launch of a new pan-Canadian party, using "United Alternative" ("UA") forums to bring grassroots Reformers together with Tories. The goal was to create a small-c conservative political alternative to the Liberals that could woo Ontarian and Atlantic Canadian voters. Manning was supported by the more right-of-centre "Focus Federally For Reform," while "Grassroots United Against Reform's Demise" ("GUARD") opposed the initiative. The United Alternative proposal created a strong debate in the Reform Party. Manning himself wrote a letter to the effect that he did not want to lead Reform anymore, but would only lead a new party. A leadership vote in 1998 managed to officially put aside the differences, with Manning winning a large majority in support of his leadership. Afterwards, Reform steadily progressed towards creating the United Alternative.

The outcome was the creation of a new party, the Canadian Reform Conservative Alliance (more commonly known as the Canadian Alliance). It fused about half of the Progressive Conservative policies, and half of Reform's policies. Reform disbanded on March 25, 2000 and was folded into the Alliance.

Even though Reform and the Alliance are considered separate parties, former Reform members dominated the new party. The Reform parliamentary caucus, with few exceptions, simply became the Alliance caucus. As a result, the Alliance was widely seen as a renamed and enlarged Reform Party. Critics of the party frequently referred to it as the "Reform Alliance" to underscore its previous incarnation as Reform, at a time when many Canadians east of Manitoba had grown uneasy about the multiple allegations of discrimination and extremism within the Reform Party as portrayed in the media.

The creation of the Canadian Alliance, and its eventual merger in 2003 with the Progressive Conservative Party to form the new Conservative Party of Canada, alienated some of the old Reform populists, who saw the merger as the final demise of the former Reform Party and the return of Tory indifference to western Canadian concerns. This led to the creation of a new "Reform Association of Canada". "Bring Back Real Reform" also was created by a fringe group of original Reformers from Ontario, with the aim of bringing back a federal Reform Party. Under the tag "Operation Back to the Future", it was launched in Spring 2005 as an umbrella for all original Reformers across the nation who felt that they were still without a political home. Neither of these groups has attracted any support.

Most of these people were also members of GUARD, were anti-UA, and were generally unsupportive of the Canadian Alliance, seeing it as a political vehicle for a Tory takeover even though the Alliance was dominated by former Reform Party members.